Tim Marlow,the Owner of the Clock Works,wanted to Know How

question 19

Multiple Choice

Tim Marlow,the owner of The Clock Works,wanted to know how many clocks he must sell in order to cover his fixed cost at a given price.Tim knew that he had a fixed cost of $20,000 for equipment,taxes,and a bank loan.He also had a unit variable cost of $20 per clock for labor and materials.If the price Tim charges for each of his clocks is $40,what is his break-even point quantity?

• A)100 clocks
• B)334 clocks
• C)500 clocks
• D)1,000 clocks
• E)10,000 clocks

---

Definitions:

End-Of-Period Net Income

The net income calculated at the end of an accounting period, reflecting the total earnings after accounting for all expenses and revenues.

Accounting Recognition

This refers to the process of recording financial transactions in the financial statements according to accepted accounting principles.

Cash Flow

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Direct Method

A way to present the cash flow statement where actual cash flows from operating activities are listed directly.